PMT
Question Answer Mark
Number
1(a) Knowledge 1
Knowledge/understanding
1 mark for definition, e.g.
• an increase in real GDP (1) OR
• an increase in an economy's productive
capacity/potential (1).
(1)
Question Answer Mark
Number
1(b) Application 2
(1534 - 1506) / 1506 x 100 (1) = 1.9% (1)
NB if the answer given is between 1.8% and 2% award
2 marks.
(2)
Question Answer Mark
Number
1(c) D
(1)
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PMT
Question Answer Mark
Number
2(a) Knowledge 1
Knowledge/understanding
1 mark for definition:
• the proportion of one additional unit of income
that is spent (1) OR
• ΔC/ΔY (1).
(1)
Question Answer Mark
Number
2(b) Application 2
Multiplier = 1/(1-MPC) OR Multiplier = 1/MPW (1)
Multiplier = 1/0.6 = 1.7 (1)
NB if the answer given is between 1.6 and 2 award 2
marks.
(2)
Question Answer Mark
Number
2(c) C
(1)
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PMT
Question Answer Mark
Number
3(a) Knowledge 1
Knowledge/understanding
1 mark for definition, e.g.
• an increase in the average/general price level (1).
(1)
Question Answer Mark
Number
3(b) B
(1)
Question Answer Mark
Number
3(c) Knowledge 2
1 mark for limitation identified and 1 mark for linked
development.
Possible answers include:
• CPI is not fully representative (1) as it is a figure for
the 'average' household (1)
• CPI does not include mortgage interest payments/ it
also excludes council tax, TV licences etc (1) which
may be a considerable expense to some households
(1)
• may suffer from sampling bias (1) either in Living
Costs and Food (LCF) Survey, or price survey (1)
• difficult to account for the changing quality of goods
and services (1) so inflation may be overestimated
(1).
(2)
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PMT
Question Answer Mark
Number
4(a) D
(1)
Question Answer Mark
Number
4(b) Knowledge 1, Application 2
Knowledge/understanding
• 1 mark for definition of a budget deficit (1).
Application:
• 1 mark for calculating government spending and
1 mark for calculating budget deficit.
Forecast government spending = £720 bn (1).
Forecast budget deficit = £612bn - £720bn = (-) £108
bn (1).
(3)
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PMT
Question Answer Mark
Number
5(a) Knowledge 1
Knowledge/understanding
1 mark for definition:
• output per unit of input (1).
(1)
Question Answer Mark
Number
5(b) Application 2
Application : 2 marks for, e.g.
• New LRAS curve drawn, showing an
outwards/rightwards shift (1).
• New equilibria labelled, showing a fall in average
price level, and an increase in real GDP (1).
(2)
Question Answer Mark
Number
5(c) A
(1)
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PMT
Question Answer Mark
Number
6(a) Knowledge 2, Application 2
Knowledge/understanding
2 marks for, e.g.
• Investment is an increase in the capital stock (1).
• Real means adjusted for inflation (1).
Application
2 marks for, e.g.
• Investment has fallen (1).
• Data reference from Figure 1, e.g. by
approximately £20bn in 2011 and 2012 (1).
(4)
Question Answer Mark
Number
6(b) Knowledge 1, Application 2, Analysis 2
Knowledge
1 mark for, e.g.
• An appreciation means that one pound becomes
worth more US dollars (1).
Application
2 marks for two data references from Figure 2, e.g.
• the pound has appreciated from £1 = $1.52 on 1
July 2013 (1), to £1 = $1.65 on 1 January 2014
(1).
Analysis
2 marks for, e.g.
• The British pound price of goods and services
imported from the US will be lower (1).
• The US dollar price of goods and services
exported from the UK will be higher (1).
(5)
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PMT
Question Answer Mark
Number
6(c) Knowledge 2, Application 2, Analysis 2
Knowledge/understanding
• Identification of two reasons (1+1).
Application
• Reference to Extract 1 (1+1).
Analysis
Linked development of why each factor led to increased
consumption (1+1), e.g.
• delayed impact of the cut in the bank rate (1) to
0.5% (1), making borrowing cheaper and providing
less incentive to save (1)
• the Funding for Lending Scheme (1) meant that
high street banks became more willing to lend to
consumers/to lend at lower rates of interest (1),
reducing the cost of borrowing (1)
• rising consumer confidence (1): the FLS led to
rising house prices (1), which created a positive
wealth effect/raising consumers' confidence and
making them more likely to spend (1).
(6)
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PMT
Question Indicative content Mark
Number
6(d) Knowledge 2, Application 2, Analysis 2
Interest rates:
• current rates will influence the cost of servicing
loans (interest payments)
• expectations of future interest rates may
influence cost projections and project viability
Other factors to consider might include:
• willingness of banks to lend to firms (FLS)
• company profitability
• level of cash held by firms
• business confidence
• sustained consumer spending (may be linked to
rising real incomes)
• rate of depreciation of capital
• inflation rate (current and future expectations)
• cost of raw materials / wage rates.
(6)
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–2 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no links between causes and
consequences.
Level 2 3–4 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or the answer may lack balance.
Level 3 5–6 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
relevant and focused examples which are fully integrated.
Economic ideas are applied appropriately to the broad
elements of the question.
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PMT
Question Indicative content Mark
Number
6(d) Evaluation 4
continued • Expectations of future values as important as current
values (e.g. interest rates).
• Weighing up of different factors – extract implies
confidence is the most important.
• Different factors may be more important for different
firms/different regions of the UK.
(4)
Level Mark Descriptor
0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/ reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evaluative comments supported by chains of reasoning and
appropriate reference to context
Evaluation is balanced and considers the broad elements of
the question.
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PMT
Question Indicative content Mark
Number
6(e) Knowledge 3, Application 3, Analysis 3
• Understanding of inflationary pressures/inflation.
The effect of a lack of investment:
• a lack of new investment may mean that
depreciation occurs at a quicker rate than
investment, reducing the productive potential of the
economy
• this could lead to a decrease in the economy's level
of aggregate supply/an inward shift of its PPF
• candidates may draw an AS/AD diagram to show
the effects of a reduction in (LR)AS
• cost-push inflationary pressures would build in the
economy.
The effect of a stronger pound:
• a stronger pound makes imports cheaper. The price
of imported goods in the CPI basket should fall,
reducing inflationary pressures
• cheaper imports and more expensive exports may
lead to a worsening of the trade balance, reducing
UK aggregate demand (this may be illustrated on
an AS/AD diagram). This would lead to a fall in
demand-pull inflationary pressures
• imported raw materials become cheaper
(particularly oil, which is priced in US dollars). This
could reduce firms' production costs, leading to an
increase in (SR)AS, and a reduction in cost-push
inflationary pressures.
NB Level 3 responses must consider the effect of both
the lack of investment and the appreciation of the
currency.
(9)
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PMT
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response; chains of reasoning are developed but
the answer may lack balance.
Level 3 7–9 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
relevant and focused examples which are fully integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.
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PMT
Question Indicative content Mark
Number
6(e) Evaluation 6
continued • It depends on the rate of depreciation of capital.
• It depends on the level of spare capacity in the
economy.
• It depends on the elasticity of the AD curve, and/or
whether a lack of investment reduces AD too.
• Comment on the significance of the appreciation.
• The effect on the trade balance and hence AD of the
appreciation depends on the PED for imports and
exports.
(6)
Level Mark Descriptor
0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/ reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant chain of
reasoning and appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question.
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PMT
Question Indicative content Mark
Number
6(f) Knowledge 4, Application 4, Analysis 6,
Evaluation 6
• Understanding of economic growth.
• Understanding of macroeconomics objectives.
Candidates may address this question in different ways.
• Explanation of the likely benefits of economic growth
to:
o consumers
o firms
o the government
o income distribution
o the environment
o current and future living standards
• Explanation of the likely costs of economic growth to:
o consumers
o firms
o the government
o income distribution
o the environment
o current and future living standards
• Explanation that economic growth may support the
achievement of some of the government's other
macroeconomic objectives:
o low unemployment
o balanced government budget
o achieving environmental goals
• Explanation that economic growth may conflict with the
achievement of some of the government's other
macroeconomic objectives:
o balance of payments equilibrium
o low, stable inflation
o reduced income inequality
o achieving environmental goals
(20)
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PMT
Knowledge, application and analysis
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or superficial, two-stage chain of
reasoning only.
Level 3 7–10 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to apply economic concepts and relate them directly to
the broad elements of the question with evidence integrated
into the answer.
Analysis is clear and coherent, although it may lack balance.
Chains of reasoning are developed but the answer may lack
balance.
Level 4 11–14 Demonstrates precise knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
appropriate examples. Analysis is relevant and focused with
evidence fully and reliably integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.
Evaluation
Level Mark Descriptor
0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context. No evidence of a
logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced leading to unsubstantiated judgements.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant reasoning and
appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question, leading to a substantiated judgement.
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PMT
Question Answer Mark
Number
6(g) Knowledge 4, Application 4, Analysis 6,
Evaluation 6
• Understanding of monetary policies.
• Understanding of macroeconomic objectives.
Candidates may consider either the impact of two
monetary policies on one or more macroeconomic
objectives each, or the impact of one monetary policy
on all of the macroeconomic objectives.
In evaluation, candidates may consider either the
macroeconomic objectives that wouldn't be met through
the use of monetary policies, or may consider the
significance of their arguments more generally.
Monetary policies which may be considered:
• change in the interest rate
• change in the value of asset purchases to affect the
money supply.
The effect of loose monetary policy on the
macroeconomic objectives:
• an increase in AD should lead to an increase in real
GDP, creating economic growth for the economy
but this depends on the level of spare capacity in the
economy, as well as consumer and business
confidence levels
• demand-pull inflationary pressures would be
increased, affecting the low, stable inflation objective
but inflation rates also depend on the level of cost-
push inflationary pressures in the economy
• unemployment should fall in the economy
• time lag – unemployment tends to be a lagging
indicator, particularly if firms already have spare
capacity
• government budget balance would improve in the
long run if the policy was successful in generating
economic growth but contractionary fiscal policy
might be more effective at achieving this objective,
certainly in the short run
• the environment might be harmed by the increased
levels of economic activity generated
• in developed economies such as UK, economic
growth tends to reduce the level of environmental
degradation
• income inequality might worsen as economic growth
tends to widen the gap between high and low income
earners but lower interest rates tend to redistribute
income from savers to borrowers, which would tend
to improved income distribution (20)
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PMT
Knowledge, application and analysis
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or superficial, two-stage chain of
reasoning only.
Level 3 7–10 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to apply economic concepts and relate them directly to
the broad elements of the question with evidence integrated
into the answer.
Analysis is clear and coherent, although it may lack balance.
Chains of reasoning are developed but the answer may lack
balance.
Level 4 11–14 Demonstrates precise knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
appropriate examples. Analysis is relevant and focused with
evidence fully and reliably integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.
Evaluation
Level Mark Descriptor
0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context. No evidence of a
logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced leading to unsubstantiated judgements.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant reasoning and
appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question, leading to a substantiated judgement.
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PMT
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